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Economic Analysis Letters

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Transitioning from Interest Rate to GDP Growth Rate for More Sustainable Equitable Economy

by Samir Alamad a,*
a
School of Economics, Finance & Accounting, Coventry University, Coventry, UK
*
Author to whom correspondence should be addressed.
JEA  2025 4(3):110; https://doi.org/10.58567/jea04030002
Received: 3 January 2025 / Accepted: 15 March 2025 / Published Online: 9 May 2025
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Abstract

Exiting literature and central banks have recently raised concerns about the ominous overlooked threat of growing global debt, and its fundamental role in financial crises and economic instability. This paper develops and models an alternative economic theory that calls for a paradigm shift from the prevailing debt-based financial economy. Through a structured literature review and conceptual analysis, the paper explores the relationship between the traditional interest-based financial economy and economic injustice and instability. The paper then through an econometric analysis of data collected from 189 countries tests its conceptualised theory advocating a gradual transition from the deb-based financial economy. The results provide three important contributions. Firstly, the results contribute to the field of economics and finance by providing a conceptual and theoretical framework for examining the interaction between the financial economy and economic equity. The paper introduces a conceptualisation of what it coins as the Equitable Optimality Economic Theory, which replaces interest rate with profit rate. Secondly, the paper extends the debate in the literature about debt theories and its impact on the financial economy by arguing that a shift towards debt-balanced and eventually debt-free financial economy provides a more equitable and stable economic system. Thirdly, the econometric modelling demonstrates that such a change would lead to improved economic growth, reduced debt levels, enhanced financial stability, and the inherent nature of profit rates provides a natural buffer against economic downturns. The study concludes by proposing a practical roadmap for this economic transition in gradual and steady approach.

Keywords: Debt; Interest Rate; Profit Rate; GDP Growth; Equitable Economy; Financial Economy;
Copyright: © 2025 by Alamad. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
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APA Style
Alamad, S. (2025). Transitioning from Interest Rate to GDP Growth Rate for More Sustainable Equitable Economy. Journal of Economic Analysis, 4(3), 110. doi:10.58567/jea04030002
ACS Style
Alamad, S. Transitioning from Interest Rate to GDP Growth Rate for More Sustainable Equitable Economy. Journal of Economic Analysis, 2025, 4, 110. doi:10.58567/jea04030002
AMA Style
Alamad S. Transitioning from Interest Rate to GDP Growth Rate for More Sustainable Equitable Economy. Journal of Economic Analysis; 2025, 4(3):110. doi:10.58567/jea04030002
Chicago/Turabian Style
Alamad, Samir 2025. "Transitioning from Interest Rate to GDP Growth Rate for More Sustainable Equitable Economy" Journal of Economic Analysis 4, no.3:110. doi:10.58567/jea04030002

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ACS Style
Alamad, S. Transitioning from Interest Rate to GDP Growth Rate for More Sustainable Equitable Economy. Journal of Economic Analysis, 2025, 4, 110. doi:10.58567/jea04030002
AMA Style
Alamad S. Transitioning from Interest Rate to GDP Growth Rate for More Sustainable Equitable Economy. Journal of Economic Analysis; 2025, 4(3):110. doi:10.58567/jea04030002
Chicago/Turabian Style
Alamad, Samir 2025. "Transitioning from Interest Rate to GDP Growth Rate for More Sustainable Equitable Economy" Journal of Economic Analysis 4, no.3:110. doi:10.58567/jea04030002
APA style
Alamad, S. (2025). Transitioning from Interest Rate to GDP Growth Rate for More Sustainable Equitable Economy. Journal of Economic Analysis, 4(3), 110. doi:10.58567/jea04030002

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